Blue-Chips, Buyouts Boost Market 50.58

Blue-chip stocks led a broad advance Monday as blockbuster buyouts dominated trading, lifting shares of telecommunication and health insurance companies.

The Dow Jones industrial average rose 50.58 to close at 5,637.72, led by gains in General Motors Corp., which released details of its plans to spin off its computer services subsidiary, Electronic Data Systems.

Broader indicators also were positive. Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume totaled 390.24 million shares as of 4 p.m., down from Friday’s pace.

Two big mergers set the tone for trading.

SBC Communications announced plans to acquire Pacific Telesis Group for $16.7 billion, or $39 a share. Also, Aetna Life and Casualty said it will acquire U.S. Healthcare Inc. for about $57 a share in an $8.9 billion deal.

Some of the stocks that moved substantially or traded heavily:

NYSE

SBC Communications, down 2-3/4 to 49-7/8.

Pacific Telesis Group, up 6 to 33-3/4.

The companies agreed to merge in a $16.7 billion deal, the first combination of two regional Baby Bell phone companies. Under the agreement, which will create the nation’s second-largest telecommunications company after AT&T, Pacific Telesis shareholders would get 0.733 shares of SBC stock for each of their shares. Based on last week’s stock prices, Pacific Telesis shareholders would receive SBC stock worth about $39 per share.

AT&T, up 1-1/8 to 62-1/4.

Nynex, up 3-1/8 to 53.

Ameritech, up 2-5/8 to 57-1/8.

Bell Atlantic, up 1-1/4 to 63-1/8.

US West, up 1-1/4 to 33-5/8.

Other telecommunications firms rose after the SBC-PacTel deal was amid speculation the SBC-PacTel merger deal would spur other deals in the rapidly-changing industry.

General Motors, up 2-7/8 to 56-1/8.

General Motors Class E, down 1/4 to 56-3/4.

The automaker’s directors agreed Sunday to turn over stock in Electronic Data Systems to current holders of GM’s Class E shares on a one-for-one basis. As part of the deal, which values EDS at $25 billion, GM negotiated a cut rate to use EDS’s services once it is independent and won a $500 million payment from EDS to complete the spin off.

Aetna Life and Casualty, down 3-1/2 to 72.

The company said it will acquire U.S. Healthcare for $8.9 billion deal in cash and stock. The merger would create the nation’s biggest medical benefits company.

NASDAQ

U.S. Healthcare, up 6 to 51-7/8.

Aetna’s takeover agreement values U.S. Healthcare’s stock at $57 a share.